Sub-Zero Rates Risk Freezing Europe's Money Markets

By

Richard Barley

Updated July 10, 2012 9:47 p.m. ET

Sometimes you can have too much of a good thing. Central banks are betting on ultralow rates to get economies going again. But last week's European Central Bank decision to cut the rate it pays on overnight deposits to zero has caused Goldman Sachs Asset Management, J.P. Morgan Asset Management and BlackRock to suspend subscriptions into their European money-market funds. That is a worrying development that could point to wider unintended consequences.

The ECB's aim in cutting its deposit rate is partly to try to persuade...